Nearly 15 years ago we made the decision to diversify our farm, and we chose to move to Pepe‘ekeo because that area gets lots of free water. How much? One inch of rain falling on one acre equals 27,500 gallons of water, and it rains about 140 inches per year at Pepe‘ekeo. That means 3,850,000 gallons fall per acre.
In an average year, about 2.3 billion gallons of rain fall on our 600-acre farm. We are constantly looking for ways to maximize this resource.
When the price of oil started rising, around five years ago, that got our attention. We decided to see what we could do about generating electricity by utilizing the flume, built by the former plantation. It took us awhile, but we are close to generating all the electricity our farm needs and at an affordable, stable price.
Someone asked me why I work toward lowering electricity rates when I am about to have cheap hydro power. I responded by saying that 70 percent of our economy is made up of consumer spending. The lower electricity rates are, the more money consumers can spend to support local farmers. This helps us, and our workers, on several levels.
Our hydro system: We added a new section to the original sugar company flume system that starts close to a hundred yards further up. From this point, a heavy plastic pipe moves the water to a point 150 feet lower in elevation.
This water pipe goes into the steel container, where it turns a turbine and then reenters the original flume.
Water exits the turbine through an opening in the concrete. Once this system is completed, it will stabilize our electricity cost no matter how high oil prices may rise.
Dr. Jim Kennedy, a friend of mine, is a respected member of the astronomy community and a tireless supoorter of the community at large. Below is the testimony he sent to the PUC.
Here is Bill Walter’s testimony against HELCO’s proposed 4.2 percent rate increase, which he submitted to the PUC. Tomorrow (Friday, November 30, 2012) is the deadline for all testimony against this rate increase, as well as the proposed Aina Koa Pono project. You can email your testimony to: hawaii.puc@hawaii.gov.
It’s in the interest of the utility, as well as in the interest of the people, that we all seek lower electricity rates.
To: hawaii.puc@hawaii.gov Subject: HELCO RATE INCREASE OF 4.2% – Docket 2012 – 0099
Commissioners,
Thank you for the opportunity to write you on this subject. At some point, the questions before you on various rate increases proposed by HELCO/HECO are simple:
•How much is enough? and
•When do we draw the line on increases?
We understand that while the questions are essentially fairly simple, finding answers can seem very difficult. Those wanting the rates to increase run through myriad statistics, data, logic and come up with apparently compelling reason. These answers come in an age old context of how we, as a society that is primarily market based, handle a monopoly supplier of an essential ingredient of our modern life. Over the generations the solution has typically revolved around ensuring a reasonable return on company (hence, stockholder) assets while providing a level of service that ensures quality to the community. While in a general case over the last 75 years that may have been reasonable, we suggest questioning that – at least for this community at this time. Please note the following:
• As it is, Hawaii Island rate payers pay four times the US national average for electric power. We pay a 25% premium compared to Oahu – today.
• Hawaii Island residents include among the most economically challenged in the State of Hawaii. While certainly not the only reason, the high cost of power works to keep our residents economically challenged. Why?
The cost of operating any business with more than a marginal energy input on the Island experiences higher energy costs than competition from most other locations. When you add to this the cost of getting our product to market (or the market to our product in the case of tourism) the competitive hurdle can become prohibitive to overcome. This increase will only add to that hurdle.
• Because of the integral nature of electric power to our way of life, the cost of electricity is little different in effect from the most regressive of taxes. If you look at this simile several issues jump at you:
In the last four years governments across the country have been highly reticent to raise taxes understanding the negative impact higher taxes would have on the economy and on those most economically challenged. This relates back to the point above – namely that higher electric power costs have a depressing affect on the economy of the Island of Hawaii, at their current level.
Local governments – including ours here on the Island of Hawaii – have taken extraordinary steps to reduce the cost of government services while retaining government service levels. On this island that has included furloughs of County workers, layoffs, employment freezes, job sharing, looking for efficiencies that allow for reduced expenses across the board, reductions in executive staff salaries, suspension or reduction in non essential services – and the list goes on. It is common place to hear of businesses on this island taking similar – and in some cases more radical steps to reduce expenses. It is uncomfortable, but notable that we have heard of no such steps taken by our utilities in order to try to pass on to the community reduced costs that may be helpful in these difficult times. In fact, what we have heard is like this – requests for higher prices. Somehow that difference is hard to take.
•The long term reality is that power generation is moving to dis-integration much as phone service has rapidly moved in that direction. It would be wise for both the Commission and the companies to ask if it is not time to consider this coming dis-integration. The only way for the current system to survive in the long run is to be in a price reduction, not price increase mode. The cost of standalone competition is inexorably being reduced. Sooner than later only those who cannot afford to get off the grid will have departed it – how will that work and will the commission have been a part of that scenario?
So my short answer to these questions is that “enough is already enough” and the line needs to be drawn now – for the survival both of the island economy and for the survival of the utility.
My personal response has been to join the Big Island Community Coalition looking for ways to reduce power costs. I am becoming proactive in this direction. We ask that the commission and, indeed, HELCO/HECO become proactive in this direction as well. Better that we spend our efforts looking for cost reducing solutions than for cost increasing reasons.
More PUC testimony from a Big Island resident opposing the Aina Koa Pono biofuels project and the proposed 4.2 percent HECO rate increase.
See below where he charted the price of crude oil over the past two years, as well as how much his HELCO bill increased over the same period of time, and didn’t find much correlation.
Dear Chair Morita & Commissioners:
I want to express my most sincere opposition both to the Aina Koa Pono Biofuel project and the Helco 4.2% rate hike.
In today’s day and age it is inconceivable that while we are living in one of the most privileged locations on the planet with regards to renewable energy resources availability we still depend on a single utility company that holds a true monopoly on the power generation and that continues to ignore what would be the most efficient path towards energy independence.
South Puna seats on a rich geothermal zone that could provide enough power for the entire Big Island. South Kona & Kohala areas have enough sun radiation to produce a significant supplement to the grid, and South Point and Saddle Road areas provide some of the most reliable wind patterns for wind generation. Yet, here we are debating on whether we should lock in a $200/barrel deal with a biofuel company. Who in its right mind would opt for this option!?
As for the rate hike, the following graph shows my cost per kWh at my home for the past two year (since Jan 2010)
As you can see from the graph, my price has increased from $0.36/kWh to $0.42/kWh, that is a 16.7% increase in just two years. Now they want an additional 4% increase? under what justification? meanwhile, HELCO continues to report record profits year after year.
Notice any discrepancy between the two graphs? In Jan 2010 the price per barrel of crude oil was $82.00, in November 2012 the price is $87.50 an increase of 6.7%. Helco has increased their rates 2.5 times the net increase of the price of oil, and now they want another increase.
For example, the ads say HECO has increased geothermal energy on the Big Island by 25 percent. That sounds wonderful – but that is from a base of only 30 MW. It also says that Aina Koa Pono will only result in $1 per month difference to a typical rate payer.
The big picture is that HECO has resisted closing down its oil-fired plants for years. But now, people are saying enough is enough.
Here is another concerned community member’s testimony against Aina Koa Pono and the proposed 4.2 percent rate increase. Send yours to hawaii.puc@hawaii.gov by tomorrow.
To: ‘Hawaii.PUC@hawaii.gov’
Subject: Dockets Docket # 2012-0185 & 2012-0099
Aloha Chair Morita and commissioners:
I am strongly against the AKP biofuel supply contract and the increase in the Helco electricity rates.
I have lived here on the Big Island in Puna, close to Pahoa for the last 14 years and am the owner of a bed & breakfast operation in Leilani Estates. I have a family with two children and two acres of property. If any of the two dockets go through it will increase the cost of doing business for me and infringe on the viability of my operation. The nature of my business requires for electricity to be available to our guests and there are many times, when I cannot control the use of it, because guests staying at my B&B may not be as conscientious in preserving energy as I am: fans, lights, radios or TVs are left on even though the visitors are not in their rooms. In order to cover additional operational cost my only option would be to increase our B&B rates, however, with the current economy this will result in a decrease of bookings, as people traveling always look for bargains and are not willing to pay higher accommodation rates, if they can get a “beat-the-price” online offer for some of the hotels as package deal with much better conditions.
On the Big Island, electricity rates have been 25 percent higher than Oahu’s rate for as long as people can remember. It has contributed to the Big Island having one of the lowest median family incomes in the state and the attendant social problems that come with a struggling economy. As a family this affects our children and the way we are able to give back into the economy and our communities.
Rising electricity rates act like a regressive tax – people at the bottom of the economic ladder suffer the most. But it is worse; as electricity prices rise, folks that can afford to leave the grid will do so, leaving the folks unable to leave to assume more of the grid infrastructure cost. It is a catch 22. For me with my business depending on consistent electricity supply, it would be impossible to leave the grid and I would be directly impacted by the increased rates and future consumer decisions.
1. Aina Koa Pono Biofuel Project – Docket 2012-0185: Rate payers will subsidize the difference between the actual oil price and the $200 that AKP will be guaranteed for 20 years. It is more than possible that actual oil prices would be substantially below $200 for the whole contract period. That will result in a heavy subsidy that rate payers must bear. The $200 per barrel rate is much too high. And the cost differential that is anticipated to be passed through to the rate payer is unconscionable. The PUC should not approve as just and reasonable that the utility should be allowed to establish a Biofuel Surcharge provision that will allow the pass through of the cost differential to the consumer as well as the actual cost pass through itself.
2. HELCO Rate Increase – Docket 2012-0099: HELCO states in its full page newspaper advertisement that only 3% of its revenue goes to profits. In 2011 HELCO reported $138.2 million in net earnings. Most small businesses in Hawaii do not have a 3% profit margin, most net earnings are much lower and that includes my Bed & Breakfast business. Increased electricity rates would narrow this margin even more. I am entirely opposed to an increase in electricity rates. As a business owner it is HELCO’s responsibility to keep the grid in operating condition. This is not the responsibility of the end users nor should we be charged for it. It is a crucial part of the operating expenses and investments in the future, that a business has to strategically make. It is the same for my business, if I let my rooms fall into disrepair or do not invest in new mattresses every few years, people will stop coming. It is in my best interest to make these investments as I am wanting to stay in business. It is the same for a utility company. Not all investments can be directly compensated by increased rates. The market and consumers will only bare so much – and as consumers, we are saying – no more! Profits will go up and down, depending on what investments have to be made – and that is true for all businesses. But as a business owner we all know that these investments are long term and also mean decreases in the company’s corporate taxes. Also, how much do you think the HELCO advertising campaign costs? Without knowing exact figures I am sure it is in the millions. As end consumers, we are paying for that, too! What a waste of good money…
Regarding the Aina Koa Pono (AKP) biofuel project, and despite its full-page newspaper ads, Hawaii Electric Light Company (HECO) has clearly shown that it does not have the public interest at heart.
The utility kept secret how much AKP would be paid – $200 per barrel – and manipulated that information to estimate that the average rate payer would pay $1 per month and make us feel like this was a small thing.
This is grossly unfair. There are many different ways HECO could have informed the public without compromising proprietary information. Instead, behind our backs, it was applying to pass through the cost of $200 per barrel oil.
It’s unconscionable to do this to the “rubbah slippah” folks.
Now, week after week, HECO continues to run its full page newspaper ads to wash our brains and tell us how much it is trying to lower our rates. Hmmmm.
This Friday, November 30, 2012, is the deadline to submit testimony to the PUC opposing the Aina Koa Pono project.
Email your letter to: hawaii.puc@hawaii.gov and reference this in the subject line: PUC Docket #2012-0185; Application for approval of biofuel supply contract with Aina Koa Pono.
Here’s the testimony I sent:
To: PUC <hawaii.puc@hawaii.gov> Subject: PUC Docket #2012-0185; Application for approval of biofuel supply contract with Aina Koa Pono
Aloha Chair Morita and commissioners:
I am strongly against the AKP biofuel supply contract.
I am president of Hamakua Springs Country Farms, which is a family farming operation. We farm 600 fee simple acres of bananas and tomatoes at Pepe‘ekeo on the Big Island. We have more than 35 years of farming experience. I am a committee member of the Hawaii Clean Energy Steering Committee. I was co-chair of the Geothermal Working Group. I have attended four Association for the Study of Peak Oil conferences, so I have a fair understanding of energy issues.
My testimony relates to the effect that the AKP biofuel contract will have on my workers and on my farm, as well as on food security in general and the Big Island’s economy in particular.
The AKP/HECO fueling arrangement contemplates AKP being paid approximately $200 per barrel of biofuel. The $200 per barrel payment to AKP will begin in 2015, when AKP is anticipated to deliver the specified quality fuel. The contract will then last for 20 years. HECO points out that the rate subsidy will only begin when AKP delivers fuel, as if to say that there will be minimum economic effect on rate payers. Nothing could be further from the truth.
The AKP fuel purchase contract of 20 years precludes utilizing potentially lower cost alternatives. Geothermal, for example, is 11 cents per kilowatt hour less than oil for generating electricity. If geothermal were used instead of oil at the 60 MW Keahole plant, it would save $58 million annually compared to oil at today’s price. And oil today is nearly half the cost of AKP’s fuel oil at $200 per barrel.
It appears that the AKP contract tracks the AEO 2012 high price scenario instead of the reference case scenario. During the last few years, knowledgeable commentators such as Jeff Rubin point out that rising demand and rising oil prices contains the seed of its own destruction. The last four recessions, dating back to 1970, indicate that oil price spikes cause recessions. And recessions cause oil prices to fall back. Global economic growth is grinding to a halt when oil is close to $100 per barrel. So it is more prudent to follow the reference case of the EIA’s AEO 2012 oil price projection – instead of the high rate case oil price path that HECO chose.
The PUC should not approve as just and reasonable that the utility should be allowed to establish a Biofuel Surcharge provision that will allow the pass through of the cost differential to the consumer as well as the actual cost pass through itself.
Rate payers will subsidize the difference between the actual oil price and the $200 that AKP will be guaranteed for 20 years. It is more than possible that actual oil prices would be substantially below $200 for the whole contract period. That will result in a heavy subsidy that rate payers must bear. The $200 per barrel rate is much too high. And the cost differential that is anticipated to be passed through to the rate payer is unconscionable.
On the Big Island, electricity rates have been 25 percent higher than Oahu’s rate for as long as people can remember. It has contributed to the Big Island having one of the lowest median family incomes in the state and the attendant social problems that come with a struggling economy.
Rising electricity rates act like a regressive tax – the folks on the lowest rungs of the economic ladder suffer the most. But it is worse; as electricity prices rise, folks that can afford to leave the grid will do so, leaving the folks unable to leave to assume more of the grid infrastructure cost.
Oil price has quadrupled in the last ten years. People and businesses have made necessary adjustments, but there is just no more to cut. Farmers have cut back on employee benefits, and they have cut back on capital improvements to survive. But this is false economy; sooner or later, maintenance foregone will catch up. Farmers are especially vulnerable because they are price takers rather than price makers. It is our food security that is at stake.
Hawaiian farmers’ and food manufacturers’ main competition is U.S. mainland producers. Oil costs make up less than 2 percent of the electricity costs on the mainland. Oil is more than 70 percent of the cost of electricity in Hawa‘ii. Any mainland food product that has substantial cheap electricity costs imbedded in it becomes relatively more competitive to Hawai‘i products as oil prices rise. AKP’s price subsidy will make Hawai‘i food producers even less competitive to their mainland counterparts. Allowing cost differential pass through will threaten our food security.
Higher electricity costs from the AKP project will affect fresh food costs. Farmers, wholesalers and customers of locally gown food all pay for the electricity that it takes to maintain the “cold chain.” That raises food cost and takes away discretionary income from consumers. Consumer spending makes up two thirds of our economy. Allowing cost differential pass through threatens our economy.
Rising electricity rates act like a regressive tax – the folks on the lowest rungs of the economic ladder suffer the most. But it is worse: As electricity prices rise, folks that can afford to leave the grid will do so. This leaves the folks unable to leave to assume more of the grid infrastructure cost. These are the very people who are most affected by rising electricity rates. Allowing cost differential pass through is not in the public interest.
In this particular project, HECO has shown that it does not have the public interest at heart. Worse, it kept secret the $200 per barrel amount that AKP would be paid and then manipulated that information to come up with an estimate of $1 per month for the average rate payer. That was grossly unfair. Passing on the high biofuel cost to the rubbah slippah folks while making it seem that there would hardly be an effect is unconscionable. There were many different ways they could have informed the public without compromising proprietary information. Instead they chose this way. It speaks for itself.
We encourage you to WEAR YOUR RUBBAH SLIPPAHS when you come to the PUC meeting on Monday (in Hilo), Tuesday (in Kona) or Thursday (in Honolulu) to let the PUC know how its approved increase to your electricity bill would affect you.
The Kona-Kohala Chamber of Commerce came up with this great idea of wearing rubbah slippahs to the PUC meetings, and we’re running with it. So to speak.
We’ll show the PUC that we are the rubbah slippah folks; the ones who are going to be affected by its decisions.
The Big Island Community Coalition opposes both proposals because they would raise, rather than lower, our electricity rates. You’ll see it on your monthly electric bills.
WHEN:
Monday, October 29, 2012 at 6 p.m. at the Hilo High School cafeteria
Tuesday, October 30, 2012 at 6 p.m. at the Kealakehe High School cafeteria
Thursday, November 1, 2012 at 6 p.m. at Farrington High School.
WHY:
The PUC members are caring human beings. But they have to know what the people want. Only two people, I think, showed up at the last PUC hearing in Hilo. We need hundreds!
The Big Island is in trouble. We have one of the highest electricity rates in Hawai‘i – almost 25 percent higher than O‘ahu’s. High electricity rates are like a giant regressive tax, only worse. As people leave the electric grid to escape its high cost, those who cannot afford to do so pay even more.
The Big Island has a robust supply of alternatives to oil. We need to mobilize and make meaningful change.
The message about getting lower cost electricity is exactly right. It is hard to be very competitive (except maybe at tourism) with very high energy costs.
It’s hard for me to express how respected a position Gail holds in the world of energy commentary. She is very knowledgeable, highly respected and she holds the starkest possible view.
I look at what she has to say as, “Okay, that’s the worst case possible, and let’s figure out a way around it.” What she emailed me validates our “work-around.” It’s an extremely important validation.
From the Big Island Community Coalition:
Aloha Members!
The PUC is holding two hearings this month, one in Hilo on October 29th, 6:00pm at Hilo High Cafeteria, and the other on October 30th, 6:00pm at Kealakehe High School Cafeteria. They want to hear YOU. Bring your kids, bring the kupuna, and bring your friends. Tell the PUC how rising electricity rates are affecting you and your family. We do not have to accept these rate hikes.
Rising electricity rates act like a giant tax that hurts the most defenseless among us. Seniors on fixed income, single moms, renters, working homeless, and businesses are all hurt by rising electricity rates. Just last month, it was reported that two houses burned down from using candles. One household was using candles for light because they could not afford the electricity bill.
The Big Island has had electricity rates 25% higher than Oahu for as long as anyone can remember. If we were successful in getting the Big Island electricity rate lowest in the state, we would be able to grow and sell more products on Oahu. There would be more jobs here on the Big Island. Instead of leaving for the mainland to find jobs, our children would be able to stay here and work.
If we were successful in getting locally-produced, lower-cost electricity, our school budget would not rise by 25% every two and a half years. That saving would go toward your child’s education instead of oil from a foreign country.
Already your actions are starting to get results. Just a short time ago, no one could imagine talking about lowering electricity rates. But because of the actions of the Big Island Community Coalition, HELCO is running full page ads in the newspaper. They are now focusing on how they can lower your electricity rates. If you show up in large numbers at the PUC hearings, you can change the thinking of the state government as well.
At the last PUC hearing the participants were mostly from Ka’u. This time folks from Ka’u, Kona, Kohala, Puna, Hilo, Waimea — the whole island, will be represented. At the last PUC hearing, the Consumer Advocate was in favor of ‘Aina Koa Pono, dismissing the opposition as NIMBYism. This time when you all show up from all parts of the Big Island, the Consumer Advocate has no choice but to advocate for the consumers — all of us.
Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions
Your actions become your habits,
Your habits become your values,
Your values become your destiny.
– Mahatma Gandhi
When you show up at the PUC hearings in large numbers, your words will become your actions. Then your actions will become your habits — on the way forward, your values will become your destiny. Our values are — taking care of all of us, not just a few of us, for generations to come.
Share Your Story
How has the rising cost of electricity affected you and your family? How would an even higher electricity rate have an impact on your lifestyle? Are you neighbors with the family who spends their evenings by candlelight? We want to know. Every story matters. This issue of costly energy involves all of us. Email us your story to bigislandcc@gmail.com.
Please mark on your calendar the PUC meeting nearest you, and consider attending if you can. Every person in attendance, every story, will make a difference.
And join us at the Big Island Community Coalition if you haven’t yet. Enter your email address here, and we will send you an occasional newsletter, like the one above, to keep you informed.
What if we substituted geothermal electricity for Aina Koa Pono’s biofuels proposal, in order to replace the 80MW that the Keahole liquid fuel-fired plant produces?
Aina Koa Pono’s proposed plan would cost rate payers the equivalent of $200/barrel of oil.
The “barrel of oil equivalent” for geothermal-produced electricity is $57/barrel, and this price will be stable for 500,000 to a million years. (Geothermal is competitive with – though cheaper than – natural gas, which is $5.16 per million BTUs and breaks even with oil at $57/barrel; and nuclear power, which breaks even at $6.26 and $69).
At today’s oil prices, there is an 11 cent difference between oil- and geothermal-produced electricity. Geothermal is cheaper by far.
The Keahole plant’s capacity is 80MW, which is 80,000 kilowatts per hour. Using geothermal would save $8,800/hour, $211,200/day, and $6,336,000/month. In a year, the savings would be $76 million.
Why can’t we split the difference? Part of the savings goes to lowering rate payers bills, and the other half to retire debt?
The electric utility should not be punished for trying to achieve its renewable energy goals. But we have to realize there may be alternatives that better prepare us for the future. Let’s not lock ourselves out of these opportunities by signing a 20-year contract just because of an arbitrary time schedule.
In the end, with geothermal we would pay the oil equivalent of $57/barrel on our electric bills. If we go Aina Koa Pono’s route, we pay the equivalent of $200/barrel.
We don’t have the actual numbers, because HELCO hasn’t released them, but what if the agreement with Aina Koa Pono is that they get paid $200/barrel, and then the oil price follows the High Oil price curve of the AEO 2012 (see below)?
In that case, if oil is $175/barrel in 2015, then the rate payers would pay the remaining $25/barrel to enjoy the benefits of jobs, biochar and liquid fuel.
But what happens if Aina Koa Pono is wrong? What happens if the price of oil follows the reference line of this graph below, instead?
Say oil in 2015 costs $110. The difference between that $110 and $200/barrel is $90/barrel.
IS THAT WHAT THE RATE PAYER WOULD PAY IF THE ACTUAL COST OF OIL IS $110/BARREL? $90/BARREL?
This can’t be right.
SURELY THE CONSUMER ADVOCATE WOULD NOT LET THAT HAPPEN TO THE CONSUMERS?
